Your Federal Quarterly Tax Payments are due April 15th Get Help Now >>

4995 by fanzhongqing

VIEWS: 0 PAGES: 36

									                                   South Carolina General Assembly
                                       119th Session, 2011-2012

H. 4995

STATUS INFORMATION

General Bill
Sponsors: Reps. Stringer, Bingham, Harrell, Parker, Ballentine, Ryan, Bedingfield, G.R. Smith, Brady,
Thayer, Patrick, Erickson, Nanney, Taylor, J.R. Smith, Allison, Bannister, Bowen, Hamilton, Henderson,
Hixon, Horne, Limehouse, Loftis, Long, Owens, Tallon, Forrester, Pope, Simrill and Sottile
Document Path: l:\council\bills\nbd\12215dg12.docx
Companion/Similar bill(s): 4994, 4996, 4997

Introduced in the House on March 13, 2012
Introduced in the Senate on May 2, 2012
Last Amended on April 26, 2012
Currently residing in the Senate Committee on Finance

Summary: Sales tax exemptions


HISTORY OF LEGISLATIVE ACTIONS

    Date     Body     Action Description with journal page number
 3/13/2012   House    Introduced and read first time (House Journal-page 10)
 3/13/2012   House    Referred to Committee on Ways and Means (House Journal-page 10)
 3/13/2012   House    Member(s) request name added as sponsor: Forrester, Pope, Simrill, Sottile
 4/19/2012   House    Committee report: Favorable with amendment Ways and Means (House
                         Journal-page 4)
 4/24/2012            Scrivener's error corrected
 4/25/2012   House    Debate adjourned (House Journal-page 30)
 4/26/2012   House    Amended (House Journal-page 35)
 4/26/2012   House    Read second time (House Journal-page 35)
 4/26/2012   House    Roll call Yeas-63 Nays-39 (House Journal-page 55)
  5/1/2012            Scrivener's error corrected
  5/1/2012   House    Read third time and sent to Senate (House Journal-page 17)
  5/2/2012   Senate   Introduced and read first time
  5/2/2012   Senate   Referred to Committee on Finance

View the latest legislative information at the LPITS web site


VERSIONS OF THIS BILL

3/13/2012
4/19/2012
4/24/2012
4/26/2012
5/1/2012
 1   Indicates Matter Stricken
 2   Indicates New Matter
 3
 4   AMENDED
 5   April 26, 2012
 6
 7                                                           H. 4995
 8
 9   Introduced by Reps. Stringer, Bingham, Harrell, Parker,
10   Ballentine, Ryan, Bedingfield, G.R. Smith, Brady, Thayer, Patrick,
11   Erickson, Nanney, Taylor, J.R. Smith, Allison, Bannister, Bowen,
12   Hamilton, Henderson, Hixon, Horne, Limehouse, Loftis, Long,
13   Owens, Tallon, Forrester, Pope, Simrill and Sottile
14
15   S. Printed 4/26/12--H.                      [SEC 5/1/12 11:48 AM]
16   Read the first time March 13, 2012.
17
18
19         STATEMENT OF ESTIMATED FISCAL IMPACT
20   REVENUE IMPACT 1/
21      This amended bill is not expected to increase or decrease state
22   general fund revenue in FY2012-13. The increase in revenue from
23   the repeal of sales and use tax exemptions amounting to an
24   estimated $12,877,500 in FY2012-13 would be offset by lowering
25   the current state sales tax rate of six percent to 5.977604 percent in
26   FY2012-13.
27   Explanation of Amendment (April 18, 2012) – By the House
28   Ways & Means Committee
29      This amended bill would reinsert eighteen sales and use tax
30   exemptions from Section 12-36-2120, Section 12-36-2610, and
31   Section 12-36-2620(2). Items subject to a maximum sales tax cap
32   limitation pursuant to Section 12-36-2110 are not affected by this
33   bill. This bill has the intended effect of broadening the sales tax
34   base by eliminating various sales and use tax exemptions, reducing
35   the sales tax rate, while keeping the total amount of sales tax
36   collected unchanged, or revenue neutral. This amended bill would
37   repeal twenty-four sales and use tax items from Section 12-36-
38   2120 and Section 12-36-2620 amounting to an increase in sales tax
39   revenue by an estimated $12,877,500 in FY2012-13. Of this
40   amount, general fund revenue would be increased by $8,585,000,
41   the Education Improvement Act Fund would be increased by


     [4995-1]
 1   $2,146,250, and the Homestead Exemption Fund would be
 2   increased by $2,146,250 in FY2012-13.
 3      This amended bill requires that the revenue generated pursuant
 4   to this Act to be used to reduce the overall sales tax rate set forth in
 5   Section 12-36-910 and Section 12-36-1110. Section 12-36-910
 6   allows a sales tax equal to five percent of the gross proceeds of
 7   sales to be imposed upon every person or business of selling
 8   tangible personal property at retail. Section 12-36-1110 permits an
 9   additional sales, use, and casual excise tax equal to one percent to
10   be imposed on certain items. This additional penny is commonly
11   referred to as the “sixth penny”, and is used to reimburse school
12   districts for the local school operating portion of a homeowner’s
13   property tax bill exempted by Act 388 of 2006. These two sections
14   permit a sales tax equal to six percent to be levied on the gross
15   proceeds of tangible personal property offered for sales at retail,
16   with several exceptions.
17      Based on the Board of Economic Advisors’ general fund
18   revenue estimate of February 15, 2012, the revenue expected to be
19   collected from one penny of sales tax is an estimated $575,000,000
20   in FY2012-13. This bill would affect an estimated $12,877,500 of
21   sales and use tax revenue in FY2012-13. The fraction of the
22   repealed sales tax exemptions to the revenue generated from one
23   penny of sales tax is an estimated 0.022396 in FY2012-13. To
24   remain revenue neutral, therefore, the sales tax rate would need to
25   be lowered from the current sales tax rate of six percent to
26   5.977604 percent in FY2012-13.
27   Explanation of Bill Filed March 13, 2012
28      This bill would delete specific sales and use tax exemptions
29   from Section 12-36-2120, repeal Section 12-36-2130 and Section
30   12-36-2610, and amend Section 12-36-2620(2). These changes
31   would affect an estimated $220,500,837 of sales and use tax
32   revenue in FY2012-13. Items subject to a maximum sales tax cap
33   limitation pursuant to Section 12-36-2110 are not affected by this
34   bill. This bill has the intended effect of broadening the sales tax
35   base by eliminating various sales and use tax exemptions, reducing
36   the sales tax rate, while keeping the total amount of sales tax
37   collected unchanged, or revenue neutral.
38      Section 1. This section would delete various sales tax
39   exemptions contained in Section 12-36-2120 and use the revenue
40   generated to reduce the overall sales tax rate set forth in Section
41   12-36-910 and Section 12-36-2610. This bill would repeal forty-
42   two sales tax items from Section 12-36-2120 amounting to an
43   increase in sales tax revenue by an estimated $191,124,951 in

     [4995-2]
 1   FY2012-13. Of this amount, general fund revenue would be
 2   increased by $127,416,633, the Education Improvement Act Fund
 3   would be increased by $31,854,159, and the Homestead
 4   Exemption Fund would be increased by $31,854,159 in FY2012-
 5   13. This section takes effect July 1, 2012.
 6      Section 2. This section would amend Section 12-36-2620(2) that
 7   requires one percent of the sales and use tax to be credited to the
 8   South Carolina Education Improvement Act of 1984 Fund by
 9   deleting the exclusion granting a one percent (one penny per each
10   dollar) sales tax exemption to an individual eighty-five years of
11   age or older. The repeal of this section would increase sales tax
12   revenue by an estimated $4,219,466 in FY2012-13. Of this
13   amount, general fund revenue would be increased by $2,812,978,
14   the Education Improvement Act Fund would be increased by
15   $703,244, and the Homestead Exemption Fund would be increased
16   by $703,244 in FY2012-13.
17      Section 3. This section would repeal Section 12-36-2130 and
18   Section 12-36-2610. Section 12-36-2130 allows specific
19   exemptions from the use tax. Section 12-36-2610 allows a discount
20   for timely payment of sales and use tax. The discount for timely
21   filing of taxes of less than $100 is three percent, and the discount
22   for timely filing of taxes of more than $100 is two percent. These
23   discounts for timely filing are subject to maximum limits. The
24   repeal of these code sections would increase sales and use tax
25   revenue by an estimated $25,156,420 in FY2012-13. Of this
26   amount, general fund revenue would be increased by $16,770,946,
27   the Education Improvement Act Fund would be increased by
28   $4,192,737, and the Homestead Exemption Fund would be
29   increased by $4,192,737 in FY2012-13.
30      Section 4. This section requires that the revenue generated
31   pursuant to this Act to be used to reduce the overall sales tax rate
32   set forth in Section 12-36-910 and Section 12-36-1110. Section 12-
33   36-910 allows a sales tax equal to five percent of the gross
34   proceeds of sales to be imposed upon every person or business of
35   selling tangible personal property at retail. Section 12-36-1110
36   permits an additional sales, use, and casual excise tax equal to one
37   percent to be imposed on certain items. This additional penny is
38   commonly referred to as the “sixth penny”, and is used to
39   reimburse school districts for the local school operating portion of
40   a homeowner’s property tax bill exempted by Act 388 of 2006.
41   These two sections permit a sales tax equal to six percent to be
42   levied on the gross proceeds of tangible personal property offered
43   for sales at retail, with several exceptions.

     [4995-3]
 1      Based on the Board of Economic Advisors’ general fund
 2   revenue estimate of February 15, 2012, the revenue expected to be
 3   collected from one penny of sales tax is an estimated $575,000,000
 4   in FY2012-13. This bill would affect an estimated $220,500,837 of
 5   sales and use tax revenue in FY2012-13. The fraction of the
 6   repealed sales tax exemptions to the revenue generated from one
 7   penny of sales tax is an estimated 0.383480 in FY2012-13. To
 8   remain revenue neutral, therefore, the sales tax rate would need to
 9   be lowered from the current sales tax rate of six percent to
10   5.383480 percent in FY2012-13.
11      Section 5. This section repeals the language contained in
12   Section 4, verbatim, and is construed to be a scrivener’s error.
13      Section 6. This section reenacts the Joint Committee on
14   Taxation as established by Act 334 of 2002, except for the
15   provisions of Section 2-41-60, which contained specific reporting
16   dates in 2006. This section requires the Joint Committee on
17   Taxation to convene by September 1, 2012 to conduct a cost-
18   benefit analysis on the sales tax exemptions contained in Section
19   12-36-2120. The committee shall submit a report detailing its
20   findings to the Governor, the General Assembly, and be made
21   available to the public. The committee shall review the sales tax
22   exemptions as it deems necessary, but no later than five years after
23   the initial review.
24      Section 7. Except as otherwise provided this act takes effect
25   upon approval by the Governor.
26                 Sales and Use Tax Exemptions / Exclusions in FY2012-2013
27      Table 1. Supporting Table for H.B.4995 as amended by the House Ways & Means
28                                 Committee on April 18, 2012
29    Line Code        Year     Description               FY2013    FY2013      Notes
30         Section     Enacted of Exemption               Exemption Subtotal
31                                                        Estimate  (Dollars)
32                                                        (Dollars)
33    1    12-36-2110           Maximum Sales
34                              Tax Caps
35    2    (A)         1984     Maximum tax on sale 169,119,572
36                              or lease of motor
37                              vehicles, motorcycles,
38                              boats, airplanes, trailer
39                              or semitrailer pulled by
40                              a truck, horse trailers,
41                              recreational vehicles,
42                              and self-propelled light
43                              construction equipment
44    3    (A)(1)               Airplanes, including                1,215,000
45                              unassembled aircraft
46                              which is to be assembled
47                              by the purchaser
48    4    (A)(2)               Motor vehicles                      148,700,000
49    5    (A)(3)               Motorcycles                         2,582,748
50    6    (A)(4)               Boats                               4,954,212

     [4995-4]
 1    7    (A)(5)            Trailer or semitrailers,                825,527
 2                           pulled by a truck tractor,
 3                           and horse trailers
 4    8    (A)(6)            Recreational vehicles,                  7,912,005
 5                           including tent campers,
 6                           travel trailer, park model,
 7                           park trailer, motor home,
 8                           and fifth wheel
 9    9    (A)(7)            Self-propelled light                    2,930,080
10                           construction equipment
11                           with compatible
12                           attachments limited
13                            to a maximum of 160
14                            net engine horsepower
15    10   (B)               Sale of manufactured 5,076,600
16                           homes
17    11   (C)               Sale of musical          96,396
18                           instruments or office
19                           equipment purchased by
20                           religious organizations
21    12   (D)               Repealed: Machines Repealed
22                           used in research and
23                           development (refer to
24                           Section 12-36-2120(56))
25    13   (E)               Equipment provided, 963,960
26                           supplied, or installed
27                           on a firefighting vehicle
28    14
29    15   12-36-2120        Exemptions From Sales Tax
30    16   (1)        1951   Tangible personal
31                           property or reciepts
32                           of business which the
33                           State is prohibited from
34                           taxing by the US or
35                           SC Constitutions          0
36    17   (2)       1984    Tangible personal
37                           property sold to the
38                           federal government        244,552,800
39    18   (3)       1951    Textbooks, books,
40                           magazines, periodicals,
41                           newspapers, and on-line
42                           access used in a course
43                           of study in all schools
44                           or for students' use in the
45                           school library            15,553,974
46    19   (4)       1951    Sale of livestock used
47                           primarily as beasts of
48                           burden and livestock
49                           that provide, food,
50                           pelts, or fur             82,209,300
51    20   (5)       1951    Feed used for
52                           production and
53                           maintenance of poultry
54                           and livestock             41,853,480
55    21   (6)       1951    Insecticides, chemicals,
56                           fertilizers, soil
57                           conditioners, seeds,
58                           or seedlings, or nursery
59                           stock, used in production

     [4995-5]
 1                       of farm, dairy, grove,
 2                       vineyard, or garden
 3                       products, or in the
 4                       cultivation of poultry
 5                       or livestock feed       20,576,340
 6    22   (7)    1951   Containers and labels
 7                       used in preparing
 8                       agriculture, dairy,
 9                       grove, or garden
10                       products, turpentine
11                       gum, gum spirits of
12                       turpentine, and gum
13                       resin for sale          612,000
14    23   (8)    1951   Newsprint paper,
15                       newspapers, religious
16                       publications, including
17                       the Holy Bible, and the
18                       SC Department of
19                       Agriculture's "The
20                       Market Bulletin"        13,101,656
21    24                 Newsprint paper                       3,680,363
22    25                 Newspaper sales                       9,140,727
23    26                 The Holy Bible                                     *
24    27                 The Market Bulletin                   10,566
25    28   (9)    1951   Coal, or coke, or
26                       other fuel sold to
27                       manufacturers,
28                       electric power
29                       companies, and
30                       transportation
31                       companies               127,485,792
32    29                 Electric Utility                      87,867,531
33    30                 Other Industry
34                       (Manufacturers)                       26,896,265
35    31                 Transportation                        12,721,996
36    32   (10)   1951   Meals or foodstuffs
37                       used in furnishing
38                       meals to school children,
39                       and meals provided to
40                       the elderly, disabled,
41                       homeless, needy, or
42                       disabled adults         7,804,174
43    33   (11)   1986   Toll charges for the
44                       transmission of voice
45                       or messages between
46                       telephone exchanges
47                       and transactions        57,814,950
48    34   (A)           Toll charges for the
49                       transmission of voice
50                       messages between
51                       telephone exchanges
52                       (long distance)                       38,881,200
53    35   (B)           Charges for telegraph
54                       messages                              negligible
55    36   (C)           Carrier and customer
56                       access charges
57                       established by the FCC
58                       or the SC Public Service
59                       Commission                            17,013,750

     [4995-6]
 1    37   (D)           Automatic teller
 2                       machine transactions                   1,920,000
 3    38   (12)   1951   Water sold by public
 4                       utilities, if rates and
 5                       charges are the kind
 6                       determined by the
 7                       Public Service
 8                       Commission or
 9                       water sold by
10                       nonprofit corporations
11                       organized under
12                       Chapter 36 of
13                       Title 33                 19,629,637
14    39   (13)   1951   Fuel, lubricants, and
15                       supplies for use or
16                       consumption aboard
17                       ships in intercoastal
18                       trade or foreign
19                       commerce. (Commonly
20                       referred to as vessel
21                       bunkering)               14,572,404
22    40   (14)   1951   Wrapping paper,
23                       wrapping twine, paper
24                       bags, and containers
25                       used in the sale and
26                       delivery of tangible
27                       personal property        27,671,968
28    41   (15)   1988   Motor fuel, blended
29                       fuel, and alternative
30                       fuel subject to tax under
31                       Chapter 28 Title 12      721,793,461
32    42   (A)           On-Highway                             698,848,578
33    43   (A)           Off-Highway                            22,944,883
34    44   (C)           Farm machinery
35                       and tractors                           1,619,442
36    45   (D)           Commercial fishing
37                       vessels                                14,115,865
38    46                 Construction                           6,984,450
39    47                 Military                               225,126
40    48   (16)   1951   Farm machinery and
41                       replacement parts and
42                       attachments used in
43                       planting, cultivating or
44                       harvesting farm crops,
45                       the preservation of milk
46                       on dairy farms, and
47                       machines used in poultry
48                       production on poultry
49                       farms, when sold in the
50                       original state of
51                       production or
52                       preparation for sale     8,351,000
53    49   (17)   1951   Machines used in
54                       manufacturing,
55                       processing, recycling,
56                       compounding, mining,
57                       or quarrying tangible
58                       personal property
59                       for sale                 69,889,455

     [4995-7]
 1    50   (18)   1951   Fuel used exclusively
 2                       to cure agriculture
 3                       products                  934,110
 4    51   (19)   1951   Electricity used by
 5                       cotton gins,
 6                       manufacturers,
 7                       miners, or quarriers
 8                       to manufacture, mine,
 9                       or quarry tangible
10                       personal property
11                       for sale                  97,031,815
12    52   (20)   1951   Railroad cars,
13                       locomotives, and
14                       their parts, monorail
15                        cars, and the engines
16                       or motors that propel
17                       them, and their parts 352,710
18    53   (21)   1951   Vessels and barges
19                       of more than 50 tons
20                       burden                    169,546
21    54   (22)   1990   Missile assembly
22                       materials used by the
23                       Armed Forces
24                       of the US                 Classified
25    55   (23)   1951   Farm, grove, vineyard,
26                        and garden products,
27                       sold in the original state
28                       of production or
29                       preparation for sale,
30                       when sold by the
31                       producer or members
32                        of the producers
33                       immediately family        693,042
34    56   (24)   1986   Supplies and
35                       machinery used by
36                       laundries, cleaning,
37                       dyeing, pressing, or
38                       garment rental
39                       establishments
40                       (excludes coin-
41                       operated laundromats) 1,932,492
42    57   (25)   1985   Motor vehicles
43                       (excluding trucks) or
44                       motorcycles sold to
45                       out-of-state residents
46                       of the US Armed Forces
47                       when by reason of
48                       orders is located in SC 800,000
49    58   (26)   1993   Supplies, technical
50                       equipment, machinery,
51                       and electricity sold to
52                       radio and television
53                       stations, and cable
54                       television systems,
55                       for use in producing,
56                       broadcasting, or
57                       distributing programs 10,568,784
58    59   (27)   1990   Plants and animal
59                       sales to public zoos

     [4995-8]
 1                       or gardens or its
 2                       nonprofit support
 3                       corporations              4,290
 4    60   (28)   1976   Medicine and
 5                       prosthetic devices
 6                       sold by prescription,
 7                       radiopharmaceuticals
 8                       used in treatment of
 9                       cancer and other related
10                       diseases, free samples
11                       donated by manufacturer,
12                       and medicines used to
13                       prevent respiratory
14                       syncytial virus           448,752,036
15    61   (A)           Medicine and
16                       prosthetic devices                      435,842,016
17    62   (B)           Diabetic supplies,
18                       including hypodermic
19                       needles, insulin, and
20                       blood sugar test strips                 9,996,000
21    63   (C)           Disposable medical
22                       supplies used in the
23                       treatment of patient
24                       outside of a hospital,
25                       skilled nursing facility,
26                       or ambulatory surgical
27                       treatment center                        260,400
28    64   (D)           Medicine donated
29                       donated by its
30                       manufacturer to SC
31                       medical schools for
32                       research, or for treatment
33                       of indigent patients                    90,420
34    65   (E)           Dental prosthetics                      2,563,200
35    66   (29)   1996   Sale of tangible
36                       personal property by
37                       persons under written
38                       contract with the federal
39                       government where the
40                       property is later transferred
41                       to the federal government               0
42    67   (30)   1978   Supplies, commodities,
43                       and services resold by
44                       the Division of General
45                       Services of State Budget
46                       and Control Board to
47                       departments and state
48                       agencies, if the tax was
49                       paid on the divisions
50                       original purchase         0
51    68   (31)   1979   Vacation time sharing
52                       plans, vacation multiple
53                       ownership interests,
54                       and exchanges of
55                       interests in vacation
56                       time sharing plans and
57                       vacation multiple
58                       ownership interests
59                       as provided by

     [4995-9]
 1                       Chapter 32 of Title 27,
 2                       and any other exchange
 3                       of accommodations in
 4                       which the
 5                       accommodations to
 6                       be exchanged are the
 7                       primary consideration 3,306,240
 8    69   (32)   1979   Natural and liquefied
 9                        petroleum gas and
10                       electricity used
11                       exclusively in the
12                       production of poultry,
13                       livestock, swine,
14                       and milk                 1,300,000
15    70   (33)   1979   Electricity or any
16                       combustible heating
17                       material or substance
18                       used for residential
19                       purposes                 276,725,575
20    71                 Electricity                            208,305,660
21    72                 Natural Gas                            35,985,035
22    73                 Kerosene                               11,128,400
23    74                 Fuel Oil                               12,526,530
24    75                 Coal                                   22,230
25    76                 LP Gas                                 8,757,720
26    77   (34)   1980   Modular homes,
27                       both on-frame and
28                       off-frame, 50% of
29                       gross proceeds of
30                       the sale                 762,450
31    78   (35)   1983   Motion picture film
32                       sold or rented to or
33                       by theaters              2,825,765
34    79   (36)   1983   Tangible personal
35                       property sold out
36                       of state                 0
37    80   (37)   1983   Petroleum asphalt
38                       products, used in
39                       paving, purchased in
40                       this state, which are
41                       transported and
42                       consumed out of
43                       state                    614,000
44    81   (38)   1985   Hearing aids             2,897,063
45    82   (39)   1986   Concession sales
46                       at a festival by an
47                       organization devoted
48                       exclusively to public
49                       or charitable purposes 475,000
50    83   (40)   1988   Containers and chassis,
51                        including parts,
52                       components, and
53                       attachments, sold to
54                       international shipping
55                       lines in contract with the
56                       SC State Ports Authority
57                       and used for the import
58                       and export of goods to
59                       and from South

     [4995-10]
 1                       Carolina                 550,000
 2    84   (41)   1989   Organizations exempt
 3                       under 12-37-220(A),
 4                       (3-4), and B(5-8), (12),
 5                       (16), (19), (22), and (24),
 6                       if the net proceeds are
 7                       used exclusively for
 8                       exempt purposes and no
 9                       benefit inures to any
10                       individual               6,725,000
11    85   (42)   1989   Depreciable assets,
12                       used in the operation
13                       of a business, pursuant
14                       to the sale of the business,
15                       when the entire business
16                       is sold by the owner and
17                       the purchaseer continues
18                       operation of the
19                       business                 125,000
20    86   (43)   1991   All supplies, technical
21                       equipment, machinery,
22                       and electricity sold to
23                       motion picture
24                       companies for use in
25                       filming or producing
26                       a motion picture         359,146
27    87   (44)   1991   Electricity used to
28                       irrigate crops           296,040
29    88   (45)   1991   Building materials,
30                       supplies, fixtures,
31                       and equipment for
32                       the construction, repair
33                       or improvement of
34                       commercial housing
35                       of poultry or livestock 417,555
36    89   (46)   1991   War memorials or
37                       monuments, including
38                       US military vessels,
39                       affixed to public
40                        property                50,000
41    90   (47)   1994   Tangible personal
42                       property sold to
43                       charitable hospitals
44                       serving children where
45                       care is provided without
46                       charge                   50,000
47    91   (48)   1994   Solid waste disposal
48                       collection bags when
49                       the county or political
50                       subdivision requires
51                       the purchase of a
52                       specific bag for solid
53                       waste disposal           38,979
54    92   (49)   1994   Postage paid by a
55                       person engaged in the
56                       business of selling
57                       advertising services
58                       for clients              825,000
59    93   (50)   1995   Recycling property,

     [4995-11]
 1                       including fuels and
 2                       gasses of any type,
 3                       fluids, and lubricants
 4                       used by a qualified
 5                       recycling facility         2,827,022
 6    94   (51)   1996   Material handling
 7                       systems and
 8                       equipment used in
 9                       distribution or
10                       manufacturing
11                       facilities                 1,400,000
12    95   (52)   1996   Parts and supplies
13                       used by business for
14                       repairing aircraft
15                       owned or leased to
16                       the federal government
17                       or commercial air
18                       carriers                   561,567
19    96   (53)   1996   Motor vehicle extended
20                        service contracts
21                       and warranties             3,194,280
22    97   (54)   1999   Clothing and attire
23                       for working in a Class
24                       100 or better clean
25                       room environment           40,000
26    98   (55)   2000   Audiovisual masters
27                       made or used by a
28                       production company
29                       for first generation
30                       reproduction               60,000
31    99   (56)   2000   Machines used in
32                       research and
33                       development                5,475,600
34    100 (57)    2000   Sales tax holiday
35                       in August
36                       (beginning the first
37                       Friday in August at
38                       12:01 AM and ending
39                       at 12:00 midnight the
40                       following Sunday)          2,250,000
41    101 (58)    2000   Cooperative direct
42                       mail promotional
43                       advertising materials,
44                       and promotional maps,
45                       brochures, pamphlets, or
46                       discount coupons by
47                       nonprofit chambers of
48                       commerce or convention
49                       and visitor bureaus,
50                       delivered to residents of
51                       SC at no charge from
52                       locations inside or outside
53                       the State                  886,400
54    102 (59)    2001   Facilities for
55                       transmitting electricity
56                       that is transferred, sold,
57                       or exchanged to a limited
58                       liability company
59                       controlling electric

     [4995-12]
 1                      transmission assets       0
 2    103 (60)   2001   Lottery ticket sales      38,552,130
 3    104 (61)   2002   Copies of or access
 4                      to legislation or other
 5                      informational documents
 6                      provided to the general
 7                      public or any other person
 8                      by a legislative agency
 9                      when a charge for these
10                      copies is made reflecting
11                      the agency's cost of
12                      the copies                7,500
13    105 (62)   2003   Seventy percent of
14                      portable toilet gross
15                      rental sales or leases 487,220
16    106 (63)   2005   Prescription and over-
17                      the-counter medicines
18                      and supplies sold to
19                      charitable clinics        229,700
20    107 (64)   2005   Sweet grass baskets
21                      made by SC artists        374,400
22    108 (65)   2006   Computer equipment
23                      used in a technology
24                      intensive facility        0
25    109 (66)   2006   Electricity used by a
26                      technology intensive
27                      facility                  0
28    110 (67)   2006   Sales tax on
29                      construction materials
30                      of a new or expanded
31                      single manufacturing or
32                      distribution facility with
33                      a capital investment of at
34                      least $100 million in
35                      real and personal
36                      property at a single site 14,160,000
37    111 (68)   2006   Any property sold to
38                      the public through a
39                      sheriff's sale as provided
40                      by law                    58,116
41    112 (69)   2006   The sale or renewal of
42                      a warranty, maintenance,
43                       or similar service
44                      contract if the sale of
45                      the personal property
46                      covered by the contract
47                      is exempt or excluded
48                      from sales tax            Reserved
49    113 (70)   2007   Gold, silver, or
50                      platinum bullion;
51                      legal tender coins
52                      and currency              82,860
53    114 (71)   2007   Any device, equipment,
54                      or machinery operated
55                      by hydrogen or fuel
56                      cells, or any device,
57                      equipment,or
58                      machinery used to
59                      generate, produce,

     [4995-13]
 1                            or distribute hydrogen 0
 2    115 (72)         2007   Building materials
 3                            used to construct a
 4                            new or renovated
 5                            building or any
 6                            machinery or
 7                            equipment located
 8                            in a research district 1,200,000
 9    116 (73)         2007   Amusement park rides
10                            and any parts, machinery,
11                            and equipment used to
12                            assemble and operate a
13                            ride or performance
14                            venue facility           2,070,000
15    117 (74)         2007   Durable medical
16                            equipment which is
17                            paid by state or federal
18                            Medicaid funds           2,523,045
19    118 (75)         2007   Unprepared food that
20                            may be purchased with
21                            United States Department
22                            of Agriculture food
23                            coupons                  435,200,249
24    119 (76)         2008   Sales tax holiday
25                            on firearms (beginning
26                            the Friday after
27                            Thanksgiving at
28                            12:01 AM and ending
29                            at 12:00 midnight the
30                            following Saturday)                        **
31    120 (77)         2008   Sales tax holiday on
32                            noncommercial home
33                            and personal energy
34                            efficient products
35                            meeting or exceeding
36                            the requirements of the
37                            ENERGY STAR program
38                            with a sales price of
39                            $2,500 or less                             **
40    121 (78)         2010   Machinery and
41                            equipment, building
42                            and other raw materials,
43                            and electricity used by a
44                            nonprofit facility used
45                            for researching and
46                            testing the impact of
47                            natural disasters on
48                            building materials used
49                            in residential, commercial,
50                            and agricultural
51                            buildings                240,000           **
52    122
53    123 12-36-2130
54    124 (1)                 Use Tax ExemptionIncluded with Sales Tax
55    125 (2)                 Purchases made by
56                            museums and
57                            exhibition rentals
58                            purchased or leased
59                            for sources outside

     [4995-14]
 1                              of the State           36,000
 2    126
 3    127 12-36-2610            Discount for timely filed
 4                              payment of tax, maximum
 5                              discount of $10,000 for
 6                              voluntarily registered
 7                              out-of-state retailers
 8                              and $3,000 for all
 9                              other retailers
10                              ($3,100 for retailers
11                              filing by EFT)          25,120,420
12    128
13    129 12-36-2620
14    130 (2)                   1% sales tax exemption
15                              for those 85 years and
16                              older                  4,219,466
17    131
18    132                       Provisos
19    133 89.44                 Tangible personal property
20                              purchased for use in
21                              private primary and
22                              secondary schools,
23                              including kindergartens
24                              and early childhood
25                              education programs
26    134 89.67        2005     Respiratory syncytial
27                              virus medicines         2,358,175
28    135 89.72        2006     Viscosupplementation
29                              therapies sales
30                              (For FY2011-12,
31                              the provision is
32                              suspended)              440,001
33    136
34    137                         Total Sales and
35                                Use Tax Exemptions 3,052,364,706
36         Notes:                 = Items amended in H.B.4995
37                     *          = Exemption ruled unconstitutional.
38                     **         = Act 338 of 2008 creating the exemptions was declared
39    unconstitutional by the S.C. Supreme Court in South Carolina v. The American
40    Petroleum Institution & BP Products North America, Inc., May 4, 2009. Statutory
41    exemption is not effective.
42         Sources:     South Carolina Department of Revenue; South Carolina Budget and
43    Control Board, Office of Economic Research; Legislative Printing and Information
44    Technology Resources.
45         South Carolina Board of Economic Advisors
46
47                                               Approved By:
48                                               Frank A. Rainwater
49                                               Board of Economic Advisors
50
51   1/ This statement meets the requirement of Section 2-7-71 for a state revenue
52   impact by the BEA, or Section 2-7-76 for a local revenue impact or Section 6-1-
53   85(B) for an estimate of the shift in local property tax incidence by the Office of
54   Economic Research.




     [4995-15]
 1
 2
 3
 4
 5
 6
 7
 8
 9                              A BILL
10
11   TO AMEND SECTION 12-36-2120, AS AMENDED, CODE OF
12   LAWS OF SOUTH CAROLINA, 1976, RELATING TO SALES
13   TAX EXEMPTIONS, SO AS TO DELETE VARIOUS
14   EXEMPTIONS;       TO    AMEND SECTION     12-36-2620,
15   RELATING TO THE COMPONENTS OF THE SALES TAX, SO
16   AS TO DELETE THE ONE PERCENT EXEMPTION TO
17   INDIVIDUALS OVER EIGHTY-FIVE YEARS OF AGE; TO
18   REPEAL SECTIONS 12-36-2130 AND 12-36-2610 RELATING
19   TO THE STATE SALES TAX; TO PROVIDE THAT THE
20   ADDITIONAL REVENUE GENERATED BY THIS ACT MUST
21   BE USED TO REDUCE THE OVERALL SALES TAX RATE;
22   AND TO RE-ENACT THE JOINT COMMITTEE ON
23   TAXATION AND REQUIRE THE COMMITTEE TO REVIEW
24   THE PROVISIONS OF SECTION 12-36-2120.
25     Amend Title To Conform
26
27   Be it enacted by the General Assembly of the State of South
28   Carolina:
29
30   SECTION 1. A. Section 12-36-2120 of the 1976 Code, as last
31   amended by Act 32 of 2011, is further amended to read:
32
33      “Section 12-36-2120. Exempted from the taxes imposed by
34   this chapter are the gross proceeds of sales, or sales price of:
35      (1) tangible personal property or receipts of any business
36   which the State is prohibited from taxing by the Constitution or
37   laws of the United States of America or by the Constitution or laws
38   of this State;
39      (2) tangible personal property sold to the federal government;
40      (3)(a) textbooks, books, magazines, periodicals, newspapers,
41   and access to on-line information systems used in a course of study
42   in primary and secondary schools and institutions of higher

     [4995]                           1
 1   learning or for students’ use in the school library of these schools
 2   and institutions;
 3         (b) books, magazines, periodicals, newspapers, and access to
 4   on-line information systems sold to publicly supported state,
 5   county, or regional libraries;
 6      Items in this category may be in any form, including microfilm,
 7   microfiche, and CD ROM; however, transactions subject to tax
 8   under Sections 12-36-910(B)(3) and 12-36-1310(B)(3) do not fall
 9   within this exemption;
10      (4) livestock. ‘Livestock’ is defined as domesticated animals
11   customarily raised on South Carolina farms for use primarily as
12   beasts of burden, or food, and certain mammals when raised for
13   their pelts or fur. Animals such as dogs, cats, reptiles, fowls
14   (except baby chicks and poults), and animals of a wild nature, are
15   not considered livestock;
16      (5) feed used for the production and maintenance of poultry
17   and livestock;
18      (6) insecticides, chemicals, fertilizers, soil conditioners, seeds,
19   or seedlings, or nursery stock, used solely in the production for
20   sale of farm, dairy, grove, vineyard, or garden products or in the
21   cultivation of poultry or livestock feed;
22      (7) containers and labels used in:
23         (a) preparing agricultural, dairy, grove, or garden products
24   for sale; or
25         (b) preparing turpentine gum, gum spirits of turpentine, and
26   gum resin for sale.
27      For purposes of this exemption, containers mean boxes, crates,
28   bags, bagging, ties, barrels, and other containers;
29      (8) newsprint paper, newspapers, and religious publications,
30   including the Holy Bible and the South Carolina Department of
31   Agriculture’s The Market Bulletin;
32      (9) coal, or coke or other fuel sold to manufacturers, electric
33   power companies, and transportation companies for:
34         (a) use or consumption in the production of by-products;
35         (b) the generation of heat or power used in manufacturing
36   tangible personal property for sale. For purposes of this item,
37   ‘manufacturer’ or ‘manufacturing’ includes the activities of a
38   processor;
39         (c) the generation of electric power or energy for use in
40   manufacturing tangible personal property for sale;
41         (d) the generation of motive power for transportation. For
42   the purposes of this exemption, ‘manufacturer’ or ‘manufacturing’
43   includes the activities of mining and quarrying;

     [4995]                            2
 1         (e) the generation of motive power for test flights of aircraft
 2   by the manufacturer of the aircraft where:
 3            (i) the taxpayer invests at least seven hundred fifty
 4   million dollars in real or personal property or both comprising or
 5   located at a single manufacturing facility over a seven-year period;
 6   and
 7            (ii) the taxpayer creates at least three thousand eight
 8   hundred full-time new jobs at the single manufacturing facility
 9   during that seven-year period; or
10         (f) the transportation of an aircraft prior to its completion
11   from one facility of the manufacturer of the aircraft to another
12   facility of the manufacturer of the aircraft, not including the
13   transportation of major component parts for construction or
14   assembly, or the transportation of personnel. This exemption only
15   applies when:
16            (i) the taxpayer invests at least seven hundred fifty
17   million dollars in real or personal property or both comprising or
18   located at a single manufacturing facility over a seven-year period;
19   and
20            (ii) the taxpayer creates at least three thousand eight
21   hundred full-time new jobs at the single manufacturing facility
22   during that seven-year period.
23      To qualify for the exemptions provided for in subitems (e) and
24   (f), the taxpayer shall notify the department before the first month
25   it uses the exemption and shall make the required investment and
26   create the required number of full-time new jobs over the
27   seven-year period beginning on the date provided by the taxpayer
28   to the department in its notices. The taxpayer shall notify the
29   department in writing that it has met the seven hundred fifty
30   million dollar investment requirement and has created the three
31   thousand eight hundred full-time new jobs or, after the expiration
32   of the seven-year period, that it has not met the seven hundred fifty
33   million dollar investment requirement and created the three
34   thousand eight hundred full-time new jobs. The department may
35   assess any tax due on fuel purchased tax free pursuant to subitems
36   (e) and (f) but due the State as a result of the taxpayer’s failure to
37   meet the seven hundred fifty million dollar investment requirement
38   and create the three thousand eight hundred full-time new jobs.
39   The running of the periods of limitations for assessment of taxes
40   provided in Section 12-54-85 is suspended for the time period
41   beginning with notice to the department before the taxpayer uses
42   the exemption and ending with notice to the department that the
43   taxpayer either has met or has not met the seven hundred fifty

     [4995]                            3
 1   million dollar investment requirement and created the three
 2   thousand eight hundred full-time new jobs.
 3      As used in subitems (e) and (f), ‘taxpayer’ includes a person
 4   who bears a relationship to the taxpayer as described in Section
 5   267(b) of the Internal Revenue Code.
 6      (10)(a) meals or foodstuffs used in furnishing meals to school
 7   children, if the sales or use are within school buildings and are not
 8   for profit;
 9        (b) meals or foodstuffs provided to elderly or disabled
10   persons at home by nonprofit organizations that receive only
11   charitable contributions in addition to sale proceeds from the
12   meals;
13        (c) food stuffs, either prepared or packaged for the homeless
14   or needy that are sold to nonprofit organizations, or food stuffs that
15   are subsequently sold or donated by a nonprofit organization to
16   another nonprofit organization. This subitem is only applicable to
17   food stuffs which are eligible for purchase under the USDA food
18   stamp program;
19        (d) meals or foodstuffs prepared or packaged that are sold to
20   public or nonprofit organizations for congregate or in-home
21   service to the homeless or needy or disabled adults over eighteen
22   years of age or individuals over sixty years of age. This subitem
23   only applies to meals and foodstuffs eligible for purchase under the
24   USDA food stamp program.
25      (11)(a) toll charges for the transmission of voice or messages
26   between telephone exchanges;
27        (b) charges for telegraph messages;
28        (c) carrier access charges and customer access line charges
29   established by the Federal Communications department or the
30   South Carolina Public Service department; and
31        (d) transactions involving automatic teller machines;
32      (12) water sold by public utilities, if rates and charges are of the
33   kind determined by the Public Service Commission, or water sold
34   by nonprofit corporations organized pursuant to Chapter 36 of,
35   Title 33;
36      (13) fuel, lubricants, and supplies for use or consumption aboard
37   ships in intercoastal trade or foreign commerce. This exemption
38   does not exempt or exclude from the tax the sale of materials and
39   supplies used in fulfilling a contract for the painting, repair, or
40   reconditioning of ships and other watercraft;
41      (14) wrapping paper, wrapping twine, paper bags, and
42   containers, used incident to the sale and delivery of tangible
43   personal property;

     [4995]                             4
 1      (15)(a) motor fuel, blended fuel, and alternative fuel subject to
 2   tax under Chapter 28 of Title 12; however, gasoline used in
 3   aircraft is not exempt from the sales and use tax;
 4         (b) if the fuel tax is subsequently refunded under Section
 5   12-28-710, the sales or use tax is due unless otherwise exempt, and
 6   the person receiving the refund is liable for the sales or use tax;
 7         (c) fuels used in farm machinery and farm tractors; and
 8         (d) fuels used in commercial fishing vessels.
 9      (16) farm machinery and their replacement parts and
10   attachments, used in planting, cultivating or harvesting farm crops,
11   including bulk coolers (farm dairy tanks) used in the production
12   and preservation of milk on dairy farms, and machines used in the
13   production of poultry and poultry products on poultry farms, when
14   such products are sold in the original state of production or
15   preparation for sale. This exemption does not include automobiles
16   or trucks;
17      (17) machines used in manufacturing, processing, recycling,
18   compounding, mining, or quarrying tangible personal property for
19   sale. ‘Machines’ include the parts of machines, attachments, and
20   replacements used, or manufactured for use, on or in the operation
21   of the machines and which (a) are necessary to the operation of the
22   machines and are customarily so used, or (b) are necessary to
23   comply with the order of an agency of the United States or of this
24   State for the prevention or abatement of pollution of air, water, or
25   noise that is caused or threatened by any machine used as provided
26   in this section. This exemption does not include automobiles or
27   trucks. As used in this item ‘recycling’ means a process by which
28   materials that otherwise would become solid waste are collected,
29   separated, or processed and reused, or returned to use in the form
30   of raw materials or products, including composting, for sale. In
31   applying this exemption to machines used in recycling, the
32   following percentage of the gross proceeds of sale, or sales price
33   of, machines used in recycling are exempt from the taxes imposed
34   by this chapter:
35         Fiscal Year of Sale           Percentage
36         Fiscal year 1997-98           fifty percent
37         After June 30, 1998           one hundred percent;
38      (18) fuel used exclusively to cure agricultural products;
39      (19) electricity used by cotton gins, manufacturers, miners, or
40   quarriers to manufacture, mine, or quarry tangible personal
41   property for sale. For purposes of this item, ‘manufacture’ or
42   ‘manufacturer’ includes the activities of processors;


     [4995]                           5
 1      (20) railroad cars, locomotives, and their parts, monorail cars,
 2   and the engines or motors that propel them, and their parts;
 3   Reserved
 4      (21) vessels and barges of more than fifty tons burden; Reserved
 5      (22) materials necessary to assemble missiles to be used by the
 6   Armed Forces of the United States;
 7      (23) farm, grove, vineyard, and garden products, if sold in the
 8   original state of production or preparation for sale, when sold by
 9   the producer or by members of the producer’s immediate family;
10      (24) supplies and machinery used by laundries, cleaning,
11   dyeing, pressing, or garment or other textile rental establishments
12   in the direct performance of their primary function, but not sales of
13   supplies and machinery used by coin-operated laundromats;
14      (25) motor vehicles (excluding trucks) or motorcycles, which
15   are required to be licensed to be used on the highways, sold to a
16   resident of another state, but who is located in South Carolina by
17   reason of orders of the United States Armed Forces. This
18   exemption is allowed only if within ten days of the sale the vendor
19   is furnished a statement from a commissioned officer of the Armed
20   Forces of a higher rank than the purchaser certifying that the buyer
21   is a member of the Armed Forces on active duty and a resident of
22   another state or if the buyer furnishes a leave and earnings
23   statement from the appropriate department of the armed services
24   which designates the state of residence of the buyer; Reserved
25      (26) all supplies, technical equipment, machinery, and electricity
26   sold to radio and television stations, and cable television systems,
27   for use in producing, broadcasting, or distributing programs. For
28   the purpose of this exemption, radio stations, television stations,
29   and cable television systems are deemed to be manufacturers;
30      (27) all plants and animals sold to any publicly supported
31   zoological park or garden or to any of its nonprofit support
32   corporations; Reserved
33      (28)(a) medicine and prosthetic devices sold by prescription,
34   prescription medicines used to prevent respiratory syncytial virus,
35   prescription medicines and therapeutic radiopharmaceuticals used
36   in the treatment of rheumatoid arthritis, cancer, lymphoma,
37   leukemia, or related diseases, including prescription medicines
38   used to relieve the effects of any such treatment, free samples of
39   prescription medicine distributed by its manufacturer and any use
40   of these free samples;
41         (b) hypodermic needles, insulin, alcohol swabs, blood sugar
42   testing strips, monolet lancets, dextrometer supplies, blood glucose


     [4995]                            6
 1   meters, and other similar diabetic supplies sold to diabetics under
 2   the authorization and direction of a physician;
 3         (c) disposable medical supplies such as bags, tubing,
 4   needles, and syringes, which are dispensed by a licensed
 5   pharmacist in accordance with an individual prescription written
 6   for the use of a human being by a licensed health care provider,
 7   which are used for the intravenous administration of a prescription
 8   drug or medicine, and which come into direct contact with the
 9   prescription drug or medicine. This exemption applies only to
10   supplies used in the treatment of a patient outside of a hospital,
11   skilled nursing facility, or ambulatory surgical treatment center;
12         (d) medicine donated by its manufacturer to a public
13   institution of higher education for research or for the treatment of
14   indigent patients; and
15         (e) dental prosthetic devices;
16         (f) prescription drugs dispensed to Medicare Part A patients
17   residing in a nursing home are not considered sales to the nursing
18   home and are not subject to the sales tax;
19         (g) respiratory syncytial virus medicines; and
20         (h) visosupplementaion therapies sales.
21      (29) tangible personal property purchased by persons under a
22   written contract with the federal government when the contract
23   necessitating the purchase provides that title and possession of the
24   property is to transfer from the contractor to the federal
25   government at the time of purchase or after the time of purchase.
26   This exemption also applies to purchases of tangible personal
27   property which becomes part of real or personal property owned
28   by the federal government or, as provided in the written contract, is
29   to transfer to the federal government. This exemption does not
30   apply to purchases of tangible personal property used or consumed
31   by the purchaser;
32      (30) office supplies, or other commodities, and services resold
33   by the Division of General Services of the State Budget and
34   Control Board to departments and agencies of the state
35   government, if the tax was paid on the divisions original purchase;
36   Reserved
37      (31) vacation time sharing plans, vacation multiple ownership
38   interests, and exchanges of interests in vacation time sharing plans
39   and vacation multiple ownership interests as provided by Chapter
40   32 of, Title 27, and any other exchange of accommodations in
41   which the accommodations to be exchanged are the primary
42   consideration;


     [4995]                            7
 1      (32) natural and liquefied petroleum gas and electricity used
 2   exclusively in the production of poultry, livestock, swine, and
 3   milk;
 4      (33) electricity, natural gas, fuel oil, kerosene, LP gas, coal, or
 5   any other combustible heating material or substance used for
 6   residential purposes. Individual sales of kerosene or LP gas of
 7   twenty gallons or less by retailers are considered used for
 8   residential heating purposes;
 9      (34) fifty percent of the gross proceeds of the sale of a modular
10   home regulated pursuant to Chapter 43 of Title 23, both on-frame
11   and off-frame. For purposes of this item only, ‘gross proceeds of
12   sale’ equals the manufacturer’s net invoice price of the modular
13   home sold, including all accessories built in to the modular home
14   at the time of delivery to the purchaser and not including freight or
15   deposit on returnable materials. The manufacturer shall collect the
16   tax and remit it to the Department of Revenue;
17      (35) motion picture film sold or rented to or by theaters;
18      (36) tangible personal property where the seller, by contract of
19   sale, is obligated to deliver to the buyer, or to an agent or donee of
20   the buyer, at a point outside this State or to deliver it to a carrier or
21   to the mails for transportation to the buyer, or to an agent or donee
22   of the buyer, at a point outside this State;
23      (37) petroleum asphalt products, commonly used in paving,
24   purchased in this State, which are transported and consumed out of
25   this State; Reserved
26      (38) hearing aids, as defined by Section 40-25-20(5);
27      (39) concession sales at a festival by an organization devoted
28   exclusively to public or charitable purposes, if:
29         (a) all the net proceeds are used for those purposes;
30         (b) in advance of the festival, its organizers provide the
31   department, on a form it prescribes, information necessary to
32   ensure compliance with this item.
33      For purposes of this item, a ‘festival’ does not include a
34   recognized state or county fair;
35      (40) containers and chassis, including all parts, components, and
36   attachments, sold to international shipping lines which have a
37   contractual relationship with the South Carolina State Ports
38   Authority and which are used in the import or export of goods to
39   and from this State;
40      (41) items sold by organizations exempt under Section
41   12-37-220A(3) and (4) and B(5), (6), (7), (8), (12), (16), (19), (22),
42   and (24), if the net proceeds are used exclusively for exempt
43   purposes and no benefit inures to any individual. An organization

     [4995]                              8
 1   whose sales are exempted by this item is also exempt from the
 2   retail license tax provided in Article 5 of this chapter;
 3      (42) depreciable assets, used in the operation of a business,
 4   pursuant to the sale of the business. This exemption only applies
 5   when the entire business is sold by the owner of it, pursuant to a
 6   written contract and the purchaser continues operation of the
 7   business; Reserved
 8      (43) all supplies, technical equipment, machinery, and electricity
 9   sold to motion picture companies for use in filming or producing
10   motion pictures. For the purposes of this item, ‘motion picture’
11   means any audiovisual work with a series of related images either
12   on film, tape, or other embodiment, where the images shown in
13   succession impart an impression of motion together with
14   accompanying sound, if any, which is produced, adapted, or
15   altered for exploitation as entertainment, advertising, promotional,
16   industrial, or educational media; and a ‘motion picture company’
17   means a company generally engaged in the business of filming or
18   producing motion pictures;
19      (44) electricity used to irrigate crops;
20      (45) building materials, supplies, fixtures, and equipment for the
21   construction, repair, or improvement of or that become a part of a
22   self-contained enclosure or structure specifically designed,
23   constructed, and used for the commercial housing of poultry or
24   livestock.
25      (46) War memorials or monuments honoring units or
26   contingents of the Armed Forces of the United States or of the
27   National Guard, including United States military vessels, which
28   memorials or monuments are affixed to public property;
29      (47) tangible personal property sold to charitable hospitals
30   predominantly serving children exempt under Section 12-37-220,
31   where care is provided without charge to the patient.
32      (48) solid waste disposal collection bags required pursuant to
33   the solid waste disposal plan of a county or other political
34   subdivision if the plan requires the purchase of a specifically
35   designated containment bag for solid waste disposal; Reserved
36      (49) postage purchased by a person engaged in the business of
37   selling advertising services for clients consisting of mailing, or
38   directing the mailing of, printed advertising material through the
39   United States mail directly to the client’s customers or potential
40   customers or by a person to mail or direct the mailing of printed
41   advertising material through the United States mail to a potential
42   customer; Reserved


     [4995]                            9
 1      (50)(a) recycling property;
 2         (b) electricity, natural gas, propane, or fuels of any type,
 3   oxygen, hydrogen, nitrogen, or gasses of any type, and fluids and
 4   lubricants used by a qualified recycling facility;
 5         (c) tangible personal property which becomes, or will
 6   become, an ingredient or component part of products manufactured
 7   for sale by a qualified recycling facility;
 8         (d) tangible personal property of or for a qualified recycling
 9   facility which is or will be used (1) for the handling or transfer of
10   postconsumer waste material, (2) in or for the manufacturing
11   process, or (3) in or for the handling or transfer of manufactured
12   products;
13         (e) machinery and equipment foundations used or to be used
14   by a qualified recycling facility;
15         (f) as used in this item, ‘recycling property’, ‘qualified
16   recycling facility’, and ‘postconsumer waste material’ have the
17   meanings provided in Section 12-6-3460;
18      (51) material handling systems and material handling equipment
19   used in the operation of a distribution facility or a manufacturing
20   facility including, but not limited to, racks used in the operation of
21   a distribution facility or a manufacturing facility and either used or
22   not used to support a facility structure or part of it. To qualify for
23   this exemption, the taxpayer shall notify the department before the
24   first month it uses the exemption and shall invest at least thirty-five
25   million dollars in real or personal property in this State over the
26   five-year period beginning on the date provided by the taxpayer to
27   the department in its notices. The taxpayer shall notify the
28   department in writing that it has met the thirty-five million dollar
29   investment requirement or, after the expiration of the five years,
30   that it has not met the thirty-five million dollar investment
31   requirement. The department may assess any tax due on material
32   handling systems and material handling equipment purchased
33   tax-free pursuant to this item but due the State as a result of the
34   taxpayer’s failure to meet the thirty-five million dollar investment
35   requirement. The running of the periods of limitations for
36   assessment of taxes provided in Section 12-54-85 is suspended for
37   the time period beginning with notice to the department before the
38   taxpayer uses the exemption and ending with notice to the
39   department that the taxpayer either has met or has not met the
40   thirty-five million dollar investment requirement.
41      (52) Parts and supplies used by persons engaged in the business
42   of repairing or reconditioning aircraft owned by or leased to the
43   federal government or commercial air carriers. This exemption

     [4995]                            10
 1   does not extend to tools and other equipment not attached to or that
 2   do not become a part of the aircraft. Reserved
 3     (53) motor vehicle extended service contracts and motor vehicle
 4   extended warranty contracts. Reserved
 5     (54) clothing and other attire required for working in a Class
 6   100 or better as defined in Federal Standard 209E clean room
 7   environment. Reserved
 8     (55) audiovisual masters made or used by a production company
 9   in making visual and audio images for first generation
10   reproduction. For purposes of this item:
11        (a) ‘Audiovisual master’ means an audio or video film, tape,
12   or disk, or another audio or video storage device from which all
13   other copies are made.
14        (b) ‘Production company’ means a person or entity engaged
15   in the business of making motion picture, television, or radio
16   images for theatrical, commercial, advertising, or education
17   purposes. Reserved
18     (56) Machines used in research and development. ‘Machines’
19   includes machines and parts of machines, attachments, and
20   replacements which are used or manufactured for use on or in the
21   operation of the machines, which are necessary to the operation of
22   the machines, and which are customarily used in that way.
23   ‘Machines used in research and development’ means machines
24   used directly and primarily in research and development, in the
25   experimental or laboratory sense, of new products, new uses for
26   existing products, or improvement of existing products.
27     (57)(a) sales taking place during a period beginning 12:01
28   a.m. on the first Friday in August and ending at twelve midnight
29   the following Sunday of:
30           (i) clothing;
31           (ii) clothing accessories including, but not limited to, hats,
32   scarves, hosiery, and handbags;
33           (iii) footwear;
34           (iv) school supplies including, but not limited to, pens,
35   pencils, paper, binders, notebooks, books, bookbags, lunchboxes,
36   and calculators;
37           (v) computers, printers and printer supplies, and computer
38   software;
39           (vi) bath wash clothes, blankets, bed spreads, bed linens,
40   sheet sets, comforter sets, bath towels, shower curtains, bath rugs
41   and mats, pillows, and pillow cases.
42        (b) The exemption allowed by this item does not apply to:
43           (i) sales of jewelry, cosmetics, eyewear, wallets, watches;

     [4995]                            11
 1            (ii) sales of furniture;
 2            (iii) a sale of an item placed on layaway or similar deferred
 3   payment and delivery plan however described;
 4            (iv) rental of clothing or footwear;
 5            (v) a sale or lease of an item for use in a trade or business.
 6         (c) Before July tenth of each year, the department shall
 7   publish and make available to the public and retailers a list of those
 8   articles qualifying for the exemption allowed by this item.
 9      (58) cooperative direct mail promotional advertising materials
10   and promotional maps, brochures, pamphlets, or discount coupons
11   by nonprofit chambers of commerce or convention and visitor
12   bureaus who are exempt from income taxation pursuant to Internal
13   Revenue Code Section 501(c) delivered at no charge by means of
14   interstate carrier, a mailing house, or a United States Post Office to
15   residents of this State from locations both inside and outside the
16   State. For purposes of this item, ‘cooperative direct mail
17   promotional advertising materials’ means discount coupons,
18   advertising leaflets, and similar printed advertising, including any
19   accompanying envelopes and labels which are distributed with
20   promotional advertising materials of more than one business in a
21   single package to potential customers, at no charge to the potential
22   customer, of the businesses paying for the delivery of the material.
23   Reserved
24      (59) facilities for transmitting electricity that is transferred, sold,
25   or exchanged by electrical utilities, municipalities, electric
26   cooperatives, or political subdivisions to a limited liability
27   company which is subject to regulation under the Federal Power
28   Act (16 U.S.C. Section 791(a)) and which is formed to operate or
29   to take functional control of electric transmission assets as defined
30   in the Federal Power Act;
31      (60) a lottery ticket sold pursuant to Chapter 150 of Title 59;
32      (61) copies of or access to legislation or other informational
33   documents provided to the general public or any other person by a
34   legislative agency when a charge for these copies is made
35   reflecting the agency’s cost of the copies. Funds received as
36   revenue from the sale of materials or as reimbursements for the
37   cost of providing certain supplies or services or refunds must be
38   remitted to the State Treasurer as collected, but in no event later
39   than twelve working days from the date of the receipt of any such
40   funds. Reserved
41      (62) seventy percent of the gross proceeds of the rental or lease
42   of portable toilets. Reserved


     [4995]                             12
 1      (63) prescription and over-the-counter medicines and medical
 2   supplies, including diabetic supplies, diabetic diagnostic
 3   equipment, and diabetic testing equipment, sold to a health care
 4   clinic that provides medical and dental care without charge to all of
 5   its patients.
 6      (64) Sweetgrass baskets made by artists of South Carolina using
 7   locally grown sweetgrass.
 8      (65)(a) computer equipment, as defined in subitem (c) of this
 9   item, used in connection with a technology intensive facility as
10   defined in Section 12-6-3360(M)(14)(b), where:
11            (i) the taxpayer invests at least three hundred million
12   dollars in real or personal property or both comprising or located at
13   the facility over a five-year period;
14            (ii) the taxpayer creates at least one hundred new full-time
15   jobs at the facility during that five-year period, and the average
16   cash compensation of at least one hundred of the new full-time
17   jobs is one hundred fifty percent of the per capita income of the
18   State according to the most recently published data available at the
19   time the facility’s construction starts; and
20            (iii) at least sixty percent of the three hundred million
21   dollars minimum investment consists of computer equipment;
22         (b) computer equipment, as defined in subitem (c) of this
23   item, used in connection with a manufacturing facility, where:
24            (i) the taxpayer invests at least seven hundred fifty
25   million dollars in real or personal property or both comprising or
26   located at the facility over a seven-year period; and
27            (ii) the taxpayer creates at least three thousand eight
28   hundred full-time new jobs at the facility during that seven-year
29   period.
30      As used in this subitem, ‘taxpayer’ includes a person who bears
31   a relationship to the taxpayer as described in Section 267(b) of the
32   Internal Revenue Code.
33         (c) For the purposes of this item, ‘computer equipment’
34   means original or replacement servers, routers, switches, power
35   units, network devices, hard drives, processors, memory modules,
36   motherboards, racks, other computer hardware and components,
37   cabling, cooling apparatus, and related or ancillary equipment,
38   machinery, and components, the primary purpose of which is to
39   store, retrieve, aggregate, search, organize, process, analyze, or
40   transfer data or any combination of these, or to support related
41   computer engineering or computer science research.
42         (d) These exemptions apply from the start of the investment
43   in or construction of the technology intensive facility or the

     [4995]                           13
 1   manufacturing facility. The taxpayer shall notify the Department
 2   of Revenue of its use of the exemption provided in this item on or
 3   before the first sales tax return filed with the department after the
 4   first such use. Upon receipt of the notification, the department
 5   shall issue an appropriate exemption certificate to the taxpayer to
 6   be used for qualifying purposes under this item. Within six
 7   months after the fifth anniversary of the taxpayer’s first use of this
 8   exemption, the taxpayer shall notify the department in writing that
 9   it has or has not met the investment and job requirements of this
10   item by the end of that five-year period. Once the department
11   certifies that the taxpayer has met the investment and job
12   requirements, all subsequent purchases of or investments in
13   computer equipment, including to replace originally deployed
14   computer equipment or to implement future expansions, likewise
15   shall qualify for the exemption described above, regardless of
16   when the taxpayer makes the investments.
17         (e) The department may assess any tax due on property
18   purchased tax free pursuant to this item but due the State if the
19   taxpayer subsequently fails timely to meet the investment and job
20   requirements of this item after being granted the exemption; for
21   purposes of determining whether the taxpayer has timely satisfied
22   the investment requirement, replacement computer equipment
23   counts toward the investment requirement to the extent that the
24   value of the replacement computer equipment exceeds the cost of
25   the computer equipment so replaced, but, provided the taxpayer
26   otherwise qualifies for the exemption, the full value of the
27   replacement computer equipment is exempt from sales and use tax.
28   The running of the periods of limitation within which the
29   department may assess taxes provided pursuant to Section
30   12-54-85 is suspended during the time period beginning with the
31   taxpayer’s first use of this exemption and ending with the later of
32   the fifth anniversary of first use or notice to the department that the
33   taxpayer either has met or has not met the investment and job
34   requirements of this item;
35      (66) electricity used by a technology intensive facility as defined
36   in Section 12-6-3360(M)(14)(b) and qualifying for the sales tax
37   exemption provided pursuant to item (65) of this section, and the
38   equipment and raw materials including, without limitation, fuel
39   used by such qualifying facility to generate, transform, transmit,
40   distribute, or manage electricity for use in such a facility. The
41   running of the periods of limitation within which the department
42   may assess taxes pursuant to Section 12-54-85 is suspended during
43   the same time period it is suspended in item (65)(d) of this section.

     [4995]                            14
 1      (67) effective July 1, 2011, construction materials used in the
 2   construction of a new or expanded single manufacturing or
 3   distribution facility, or one that serves both purposes, with a capital
 4   investment of at least one hundred million dollars in real and
 5   personal property at a single site in the State over an
 6   eighteen-month period, or effective November 1, 2009,
 7   construction materials used in the construction of a new or
 8   expanded single manufacturing facility where:
 9         (i) the taxpayer invests at least seven hundred fifty million
10   dollars in real or personal property or both comprising or located at
11   the facility over a seven-year period; and
12         (ii) the taxpayer creates at least three thousand eight hundred
13   full-time new jobs at the facility during that seven-year period.
14      To qualify for this exemption, the taxpayer shall notify the
15   department before the first month it uses the exemption and shall
16   make the required investment over the applicable time period
17   beginning on the date provided by the taxpayer to the department
18   in its notices. The taxpayer shall notify the department in writing
19   that it has met the investment requirement or, after the expiration
20   of the applicable time period, that it has not met the investment
21   requirement. The department may assess any tax due on
22   construction materials purchased tax free pursuant to this subitem
23   but due the State as a result of the taxpayer’s failure to meet the
24   investment requirement. The running of the periods of limitations
25   for assessment of taxes provided in Section 12-54-85 is suspended
26   for the time period beginning with notice to the department before
27   the taxpayer uses the exemption and ending with notice to the
28   department that the taxpayer either has met or has not met the
29   investment requirement.
30      As used in this subitem, ‘taxpayer’ includes a person who bears
31   a relationship to the taxpayer as described in Section 267(b) of the
32   Internal Revenue Code.
33      (68) any property sold to the public through a sheriff’s sale as
34   provided by law. Reserved
35      (69) [Reserved]
36      (70)(a) gold, silver, or platinum bullion, or any combination
37   of this bullion;
38         (b) coins that are or have been legal tender in the United
39   States or other jurisdiction; and
40         (c) currency.
41      The department shall prescribe documentation that must be
42   maintained by retailers claiming the exemption allowed by this


     [4995]                            15
 1   item. This documentation must be sufficient to identify each
 2   individual sale for which the exemption is claimed.
 3      (71) any device, equipment, or machinery operated by hydrogen
 4   or fuel cells, any device, equipment, or machinery used to
 5   generate, produce, or distribute hydrogen and designated
 6   specifically for hydrogen applications or for fuel cell applications,
 7   and any device, equipment, or machinery used predominantly for
 8   the manufacturing of, or research and development involving
 9   hydrogen or fuel cell technologies. For purposes of this item:
10         (a) ‘fuel cells’ means a device that directly or indirectly
11   creates electricity using hydrogen (or hydrocarbon-rich fuel) and
12   oxygen through an electro-chemical process; and
13         (b) ‘research and development’ means laboratory, scientific,
14   or experimental testing and development of hydrogen or fuel cell
15   technologies.     Research and development does not include
16   efficiency surveys, management studies, consumer surveys,
17   economic surveys, advertising, or promotion, or research in
18   connection with literary, historical, or similar projects.
19      (72) any building materials used to construct a new or renovated
20   building or any machinery or equipment located in a research
21   district. However, the amount of the sales tax that would be
22   assessed without the exemption provided by this section must be
23   invested by the taxpayer in hydrogen or fuel cell machinery or
24   equipment located in the same research district within twenty-four
25   months of the purchase of an exempt item.
26      ‘Research district’ means land owned by the State, a county, or
27   other public entity that is designated as a research district by the
28   University of South Carolina, Clemson University, the Medical
29   University of South Carolina, South Carolina State University, or
30   the Savannah River National Laboratory.
31      (73) an amusement park ride and any parts, machinery, and
32   equipment used to assemble, operate, and make up an amusement
33   park ride or performance venue facility located in a qualifying
34   amusement park or theme park and any related or required
35   machinery, equipment, and fixtures located in the same qualifying
36   amusement park or theme park.
37         (a) To qualify for the exemption, the taxpayer shall meet the
38   investment and job requirements provided in subsubitem (i) of
39   subitem (b) over a five-year period beginning on the date of the
40   taxpayer’s first use of this exemption. The taxpayer shall notify
41   the Department of Revenue of its intent to qualify and use this
42   exemption and upon receipt of the notification, the department
43   shall issue an appropriate exemption certificate to the taxpayer to

     [4995]                           16
 1   be used for qualifying purposes under this item. Within six
 2   months after the fifth anniversary of the taxpayer’s first use of this
 3   exemption, the taxpayer shall notify the department, in writing,
 4   that it has or has not met the investment and job requirements of
 5   this item. If the taxpayer fails to meet the investment and job
 6   requirements, the taxpayer shall pay to the State the amount of the
 7   tax that would have been paid but for this exemption. The running
 8   of the periods of limitations for assessment of taxes provided in
 9   Section 12-54-85 is suspended for this time period beginning with
10   the taxpayer’s first use of this exemption and ending with notice to
11   the department that the taxpayer has or has not met the investment
12   and job requirements of this item.
13        (b) For purposes of this item:
14           (i) ‘Qualifying amusement park or theme park’ means a
15   park that is constructed and operated by a taxpayer who makes a
16   capital investment of at least two hundred fifty million dollars at a
17   single site and creates at least two hundred fifty full-time jobs and
18   five hundred part-time or seasonal jobs.
19           (ii) ‘Related or required machinery, equipment, and
20   fixtures’ means an ancillary apparatus used for or in conjunction
21   with an amusement park ride or performance venue facility, or
22   both, including, but not limited to, any foundation, safety fencing
23   and equipment, ticketing, monitoring device, computer equipment,
24   lighting, music equipment, stage, queue area, housing for a ride,
25   electrical equipment, power transformers, and signage.
26           (iii) ‘Performance venue facility’ means a facility for a live
27   performance, nonlive performance, including any animatronics and
28   computer-generated performance, and firework, laser, or other
29   pyrotechnic show.
30           (iv) ‘Taxpayer’ means a single taxpayer or, collectively, a
31   group of one or more affiliated taxpayers. An ‘affiliated taxpayer’
32   means a person or entity related to the taxpayer that is subject to
33   common operating control and that is operated as part of the same
34   system or enterprise. The taxpayer is not required to own a
35   majority of the voting stock of the affiliate. Reserved
36      (74) durable medical equipment and related supplies:
37        (a) as defined under federal and state Medicaid and
38   Medicare laws;
39        (b) which is paid directly by funds of this State or the United
40   States under the Medicaid or Medicare programs, where state or
41   federal law or regulation authorizing the payment prohibits the
42   payment of the sale or use tax; and


     [4995]                            17
 1        (c) sold by a provider who holds a South Carolina retail
 2   sales license and whose principal place of business is located in
 3   this State.
 4      (75) unprepared food that lawfully may be purchased with
 5   United States Department of Agriculture food coupons. However,
 6   the exemption allowed by this item applies only to the state sales
 7   and use tax imposed pursuant to this chapter.
 8      (76) sales of handguns as defined pursuant to Section
 9   16-23-10(1), rifles, and shotguns during the forty-eight hours of
10   the Second Amendment Weekend. For purposes of this item, the
11   ‘Second Amendment Weekend’ begins at 12:01 a.m. on the Friday
12   after Thanksgiving and ends at twelve midnight the following
13   Saturday.
14      (77) Energy efficient products purchased for noncommercial
15   home or personal use with a sales price of two thousand five
16   hundred dollars per product or less.
17        (a) For the purposes of this exemption, an ‘energy efficient
18   product’ is any energy efficient product for noncommercial home
19   or personal use consisting of any dishwasher, clothes washer, air
20   conditioner, ceiling fan, fluorescent light bulb, dehumidifier,
21   programmable thermostat, refrigerator, door, or window, the
22   energy efficiency of which has been designated by the United
23   States Environmental Protection Agency and the United States
24   Department of Energy as meeting or exceeding each agency’s
25   energy-saving efficiency requirements or which have been
26   designated as meeting or exceeding such requirements under each
27   agency’s ENERGY STAR program, and gas, oil, or propane water
28   heaters with an energy factor of 0.80 or greater and electric water
29   heaters with an energy factor of 2.0 or greater.
30        (b) This exemption shall not apply to purchases of energy
31   efficient products purchased for trade, business, or resale.
32        (c) The exemption provided in this item applies only to sales
33   occurring during a period commencing at 12:01 a.m. on October 1,
34   2009, and concluding at 12:00 midnight on October 31, 2009,
35   (National ‘Energy Efficiency Month’) and every year thereafter
36   until 2019.
37        (d) Each year until 2019, the State Energy Office shall
38   prepare an annual report on the fiscal and energy impacts of the
39   October first through October thirty-first exemption and submit the
40   report to the General Assembly no later than January first of the
41   following year.
42        (e) Beginning with the February 15, 2009, forecast by the
43   Board of Economic Advisors of annual general fund revenue

     [4995]                          18
 1   growth for the upcoming fiscal year, and annually after that, if the
 2   forecast of that growth then and in any adjusted forecast made
 3   before the beginning of the fiscal year equals at least five percent
 4   of the most recent estimate by the board of general fund revenues
 5   for the current fiscal year, then the exemption allowed by this item
 6   shall be allowed for the applicable year. If the February fifteenth
 7   forecast or adjusted forecast annual general fund revenue growth
 8   for the upcoming fiscal year meets the requirement for the credit,
 9   the board promptly shall certify this result in writing to the
10   department. Reserved
11      (78) machinery and equipment, building and other raw
12   materials, and electricity used in the operation of a facility owned
13   by an organization which qualifies as a tax exempt organization
14   pursuant to the Internal Revenue Code Section 501(c)(3) when the
15   facility is principally used for researching and testing the impact of
16   such natural hazards as wind, fire, water, earthquake, and hail on
17   building materials used in residential, commercial, and agricultural
18   buildings. To qualify for this exemption, the taxpayer shall notify
19   the department of its intent to qualify and shall invest at least
20   twenty million dollars in real or personal property at a single site in
21   this State over the three-year period beginning on the date
22   provided by the taxpayer to the department in its notices. After the
23   taxpayer notifies the department of its intent to qualify and use the
24   exemption, the department shall issue an appropriate exemption
25   certificate to the taxpayer to be used for qualifying purposes.
26   Within six months of the third anniversary of the taxpayer’s first
27   use of the exemption, the taxpayer shall notify the department in
28   writing that it has met the twenty million dollar investment
29   requirement or, that it has not met the twenty million dollar
30   investment requirement. The department may assess any tax due
31   on the machinery and equipment purchased tax free pursuant to
32   this item but due the State as a result of the taxpayer’s failure to
33   meet the twenty million dollar investment requirement. The
34   running of the periods of limitations for assessment of taxes
35   provided in Section 12-54-85 is suspended for the time period
36   beginning with notice to the department before the taxpayer uses
37   the exemption and ending with notice to the department that the
38   taxpayer either has met or has not met the twenty million dollar
39   investment requirement. Reserved”
40
41   B.   This section takes effect July 1, 2012.
42
43   SECTION 2. Section 12-36-2130 of the 1976 Code is repealed.

     [4995]                            19
 1
 2   SECTION 3. The revenue generated pursuant to this Act must be
 3   used to reduce the overall sales tax rate set forth in Sections
 4   12-36-910 and 12-36-1110.
 5
 6   SECTION 4. The revenue generated pursuant to this Act must be
 7   used to reduce the overall sales tax rate set forth in Sections
 8   12-36-910 and 12-36-1110.
 9
10   SECTION 5. A. The Joint Committee on Taxation, as
11   established by Act 334 of 2002, and contained in Chapter 41, Title
12   2, is re-enacted under the same provisions as it was originally
13   enacted by Act 334 of 2002, except for the provisions of Section
14   2-41-60.
15
16   B. By September 1, 2012, the Joint Committee on Taxation shall
17   convene for the purpose of conducting a cost benefit analysis on
18   the provisions of Section 12-36-2120. The committee shall submit
19   a report to the Governor and the General Assembly detailing its
20   findings and recommendations. The report must be made available
21   to the public. The committee shall review the feasibility of the
22   exemptions as often as it deems appropriate, but no later than its
23   session every five years after the initial review.
24
25   SECTION 6. Except as otherwise provided this act takes effect
26   upon approval by the Governor.
27                             ----XX----
28




     [4995]                          20

								
To top